Best investments at ages 55-plus

How should you divide up your investments from the age of 55 and older? Try this model portfolio.

(MONEY magazine) -- Welcome to the homestretch! You still need momentum, but with retirement in sight, your mix of stocks and bonds should begin to balance out.

Keep only 50% to 60% in equities -- on the higher end if you have a pension or plan to work past 65, suggests Scott Thoma of Edward Jones. That way you'll get growth from stocks but just as much stability from bonds.

As you enter retirement, you can gradually tip the balance toward the safer side of your portfolio.

Here is the third of three model portfolios -- this one will carry you from the age of 55 and up -- and suggestions for investments, including low-cost funds from the MONEY 70. You can also check out our investing tips for ages 35 to 44 and 45 to 54.

Want to exercise more muscle? Choose the "boost" option, which involves taking a bit more risk for the chance at more return.

Even without this extra pop, though, the strong core you'll find here will help you reach retirement a winner.

What's in the core portfolio

You continue to cut from your equity side and use some of the money to add to U.S. bonds (which jump from 18% to 25% of your portfolio) and foreign bonds (which bump up only slightly, from 4% to 5%). The remaining dough goes into these categories:

Government securities: Put 5% into TIPS. Vanguard Inflation-Protected Securities (VIPSX): Treasury Inflation-Protected Securities help offset increases in the price of goods -- which can be a killer once you enter retirement.

Sounds good, right? Just one problem: Yields on TIPS have fallen to historic lows. That means that if you buy in now, a rise in rates could lead to temporary losses. A better move: Build up the position gradually through this Vanguard fund, which invests heavily in TIPS of shorter maturities. If yields turn around, the funds can trade up.

Cash: 2%. Vanguard Short-Term Bond Index (VBISX): In your fifties, you want to start moving a small portion (2%) of your portfolio to cash, advises Dallas financial planner John Kvale. That way, as you near retirement, a portion of your savings is safe from stock or bond swings -- which should help keep you from going into panic mode.

With money-market funds paying just 0.03% per year right now, however, you might want to store the cash in a short-term bond fund like this one from Vanguard. It's a little bit riskier than a cash account but yields a lot more (1.74%). Increase your stash to a year of expenses just before quitting work.

The boost

With retirement on the horizon, now is not the time for big risks. However, you could peel from your large-caps and put 10% in dividend-paying stocks, the income from which can buoy your portfolio. Today you can easily find blue chips paying more than 2% -- the yield on a 10-year Treasury -- with potential for increases.

Dividend stocks: 10%. Microsoft (MSFT, Fortune 500): The stock yields 2.5%, and the tech giant spends only 20% of its cash on the dividend, leaving room to grow the payout. Also, shares are priced at 11 times expected earnings (the S&P average is 13).